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US banks under spotlight over Madoff scandal

The role of federally regulated US banks in the $50bn (€36bn) Bernard Madoff investment scandal is under the spotlight after it emerged that several victims of his alleged Ponzi scheme believed they had invested their money with an ordinary bank.

Unaware about their exposure to Madoff, a couple said they thought that they had invested nearly $1m with the Westport National Bank, a regulated savings bank in Connecticut, which sent them annual statements.

These showed deductions for custodial and record-keeping fees that added up to 4% a year, Craig Stein, an attorney with Stein & Pinsky, said.

Goldman Sachs Asset Management said it “never felt comfortable with Madoff”, as it “never understood the investment process or the returns ... if clients wanted to invest with him, they did not do it through us”.